Aleksei Mordashov, CEO of Severstal (file photo) (epa)
May 26, 2006 – Arcelor and Russia's largest steelmaker, Severstal, have agreed to merge, in a deal that will create the world's biggest steelmaker.

The deal could also block a hostile takeover bid for Arcelor by Mittal Steel, until now the only global steel producer larger than Arcelor.

Severstal's controlling shareholder Aleksei Mordashov called the deal a "breakthrough" for his firm and for Russian industry's international image.

The merger still needs the approval of Arcelor shareholders, who are due to meet next month.